tv Fast Money CNBC October 11, 2013 5:00pm-5:31pm EDT
we are going to be bringing you the very latest on the happenings out of washington. the rest of it on cnbc.com. i hope you'll follow me this weekend on google plus. have a fantastic weekend. that does it for closing bell. thanks for being with me. remember you should stay with cnbc right now. fast money begins and then special coverage on the debt threat. have a good one. see you monday. live from the nasdaq markets in new york city's time square. this is fast money. i'm melissa lee. fast forward trades earning season heats up next week get the trade ahead of the numbers on yahoo and chipotle. short story, find out why the all star contrarian is restarting his short fund after four years of going long. and retail reality check, the economy may be improving, but consumers aren't buying it. our traders tonight are tim
seymour, josh brown and guy adami. our top story, d.c. dysfunction. luke russert joins us with the latest. luke, we want to know what are the chances of us coming back to work on monday and having a deal in hand? >> well, earlier today we thought chances would be good for that to happen. and there still is a lot of optimism here on capitol hill. but we must temper that to some degree. as of right now i'm hearing from gop leadership aides, there is some sort of difference in opinion of how to proceed between harry reid and president obama. there has been talk of a six week extension the debt limit that the house gop would do. they would do this in exchange for the commitment from the white house for large scale bipartisan deficit reductions this agreement would go to november 22nd. they would agree to fund the government through december 15th in exchange for that the white house offers a concession that they would have given up in those bipartisan negotiations anyway. harry reid has said on the democratic side of the senate he doesn't want a six week deal.
they want something longer perhaps a year long debt limit extension. there is a ton of ideas floating around over there. the worry is from house conservatives, the senate acts more quickly, and they have an agreement that is more favorable for the white house, the white house would go in that direction and leave them mute. so we thought these were negotiations between the house gop and the white house or the end all be all. now the senate is involved. so there is still optimism in the senate that both sides are talking, which is a huge improvement from just two days ago. and in light of these recent polls where republican brand has taken a hit, the leadership on both sides wants to get something done. as far as what that deal will look like it's unclear right now. we'll have a good idea probably by close of saturday business tomorrow. but as of right now, i cannot guarantee to you guys we'll see the vehicle for a debt limit extension in public view by monday. so still very much a fluid situation. >> all right. luke, thanks for filling us in. luke russert. an interesting dynamic in the marths here the markets seem to
want to believe there will be a deal by monday. seeing that the markets levitate in today's session, josh. >> take it backward. name one significant d.c. event before which it made sense to have a radical shift to asset allocation, every time you play the game you probably lost. so i think what the plarkt is telling you here they view this as the, quote, unquote, last tackle to break. and typically if you want to look at what the stats say, a year that gets off to the start this one did, you'd rather be long than short. trust me. and typically, october is, quote, unquote, the pivot month. where the bears really get killed historically speaking going back as many decades as you'd like to. that's the prevailing sentiment. >> i hear you. but i think if you think about 45 s & p points which take us 1.5% from the highs of where we were before there was a government shutdown isn't it a little risk -- i think you're right. people want to be long this market. but i also think if you look at it from a short term
perspective. right now, 45 s & p points later, with no deal on the table, obama care back in the conversation, six weeks until we do this again it pays to have a little power. >> if what luke russert tells you sounds familiar, it should. it's exactly what happened at the end of 2011. it's a kick the can temporary solution. >> agreed. >> but the market moves on. >> take what happened with rates for t bills. those rates went higher. there is risk being priced in the market even though it's not in equities. bond traders are seeing yes, there's a risk here. >> i think there's always a risk. early in the week on wednesday i said i think we'll see 1620. i also said i think once you have any wind of any sort of resolution you will see 20 to 25 upside. it was twice that. here we are. the action today was startling given what happened yesterday. and technically, if anybody cares we had an outside week to the upside in the s & p. so that should give us another
20 to 25 handles. to tim's point. it probably is getting a little late here. and i'm hard pressed to believe you want to jump in. but some of these energy names we talk about, conoco phillips and exxon mobil talked about earlier in the week seems to hold 85 85.5. >> tech had nice gains today. small caps had nice gains today. the question is if we have a deal some time this weekend is it a sell the news sort of event or do we rally? >> it's sell the news. if you get 1725 print that guy thinks you get, to me we just -- we're trading technically. we went down to 1650. straight up to 1700. so once we get a deal whether it be something for a year or six weeks, you know we've seen this playbook like josh said. but to me it's different. we're at all time highs. we're going to be very quickly focused on earnings. let me tell you people the earnings we saw this week that were related to the u.s. consumer were not good. okay? and we saw misses from gap on the same store sales. obviously that's pretty heavy in china. we saw it in limited.
the u.s. consumer is tapped. the longer the shutdown the more -- the worse the earnings visibility will be for the q-4. >> full coverage of the d.c. dysfunction in tonight's special report, rise above, kicking off at 6:00 p.m. eastern time on cnbc after options action. with the markets surging, why prepare to go short right now? joining us is bill fleckenstein. he joins us. bill, great to speak with you. >> thanks for having me backs. >> give us context as to why now in terms of what's going on with the fed. and also valuations in the market. >> well, to answer your first question, if you're going to be in position to do something at some point, you have to plan to do it. and then you have to go out and get set up. so at this juncture, i'm just moving the parts forward, so that i could restart my fund
early next year. having said that if i had started it yesterday, i wouldn't be short a share of anything. the reason i closed my fund i knew the fed would print lots of money, i never dreamed it would go on this long or stocks would get back to here. but they have. and when i closed it down i said to my friends, that i wasn't going to try to get short stocks until something took the printing press away from the fed. my view is the backup in the bond market had not much to do with tapering. and a lot to do with the bond market beginning to price in a different outcome. i believe the fed is starting to lose the bond market. if that develops, you will profitably be short, something that has been next to impossible to do for four years. so that's why i would like to get in position to be able to get set up to take advantage of the fact that one of these days the fed will not be able to continue on its mission, which
is to print as much money as it deems necessary. those policies -- wait those policies created both bubbles, and the misshapen warped economy we have today. the fed is not the solution, it's the problem. end of my speech. sorry. what's your question? >> sorry to interrupt, bill. a trigger to start going short from the bond plarth. in other words, is there a level of rates, you know what now is the time to get back in the market and short? >> that's a good question. listen, when you see what the market is telling you, obviously there's a lot of guesswork. right? and so the reason why it matters what the fed is doing, is my experience in running a short fund in the post 2000 decade if the fed was printing money it was almost impossible to make money on shorts. when the fed wasn't able to print money, then up could. how much do they have to print and all that? what's the rate of change? it's subjective. and it seems to me if ten year
rates traded back through threesome time in the next few months, it would be a clear signal the bond market was sinking, not because of tapering, but for some other reason. that other reason might be that the bond market no longer wants to trade at 3% when we're printing money like mad. and ultimately the bond market is a loser's game the paper gets depreciated through various forms of inflation. >> bill, it's guy. thanks for coming on. so you are a thoughtful person. the fact you're even considering this leads me to believe that you clearly see something on the horizon. with that said could the moves we see, if things shake out the way you think they will shake out, could they mirror what we saw 2008 2009 in terms of equity market? >> yes. but i don't want to make it sound like i see something tomorrow, and i'm all itchy to do something. i just want to get prepared because i know that outcome is coming. i don't know when the bond market will say we've had enough. okay? and when that happens, i believe
there is so much money, so much money has been invested in stocks and bonds that are mispriced. nobody with an ounce of brains would accept 3% coupon in the world we live in today. but people don't have a choice because the fed has been pinning rates on the short end. and when the world was worried about a deflationary outcome, any amount of income was okay you knew the government would pay you back. if that collapse is off the table. and you have to go down the path of holding these bonds and getting something for them then the bond market can decline. if the bond market starts to decline and the fed can't control it, then at some point you get chaos in the financial markets. it won't be like '08. because it won't be the financial stimulus imploding on itself. but if bond rates around the world cannot be controlled by the central banks any more that would be a big problem. >> bill, last question. we're just about out of time. in the meantime you told our
colleague, that you might be sitting on cash in your short fund quite some time even a year. in the meantime, you say gold is a good investment, gold hasn't reacted as one might think it would react during these turbulent times. >> you are absolutely correct. gold was a great investment for ten years in a row. and for the last couple years, it hasn't been. now, the problem with gold it's insanely volatile. it has a personality nobody can understand. but over time it can't be printed. and it will protect you against money printing not every week or year. it's in the same way -- look the reason art goes to ridiculous prices and sports franchises and all these things that can't be duplicated they go up in price over time because they're just going down against the value of money which deteriorates, but nobody seems too bothered by that. >> all right. thanks. >> gold is a good long run proposition to protect yourself.
does that mean it's going up next week? i have no idea. >> fair enough. thanks for phoning in appreciate it. hope you phone in some time soon. reopening his short fund. this comes on the heels of major investors, hedge fund investors closing funds, returning capital to investors and big names like carl icahn. >> i think a lot of the problems bill was talking about, i think if we don't have deflation, we don't have enough inflation, every central bank is trying hard. gold doesn't work in this environment. we're in an environment after a ten year run and a weaker dollar, dollar is strengthening. >> retail space, believe it or not, we're only 48 days away from black friday guy. >> come on. >> up next. banks are in the spotlight with jpmorgan and wells fargo reporting earnings. we'll help you prepare for your portfolio and all of the action there right here on fast. stay tuned.
y. sales go down, i'm not happy. merch comes back, i'm not happy. use ups. they make returns easy. unhappy customer becomes happy customer. then, repeat customer. easy returns, i'm happy. repeat customers, i'm happy. sales go up, i'm happy. i ordered another pair. i'm happy. (both) i'm happy. i'm happy. happy. happy. happy. happy. happy happy. i love logistics.
next week we get citi bank of america goldman sachs. >> wells was good. jpmorgan was good. and the thing about citi. b of a will report 19 cents. that is versus a flat quarter a year ago. i wouldn't be shocked if they surprise with an upside again. i like it. >> i thought the revenues -- i was surprised actually. i thought if there was a quarter they would smoke earnings for jpm, it was this they didn't. the stock action indicates. that i was wrong on jpm. if you want to look at a bank the one that sticks out to me blackstone had a big day today. if you want to look at usb next week should be interesting. >> it took an $8 billion write down on fines. the operating business of jp is fine. >> that was good news. they left a lot of comfort, that they are well reserved on the litigation side actually i thought they did better.
>> big movers, for the week. drop for citrix systems down 16%. >> the stock was down 12.5% in one day. down for the quarter, just reported. you have to wait a week see what the guidance looks like going forward. this stock went from 52 week highs a month ago. i think it's a no touch. >> darden up 8%. >> these restaurants do what they do regardless of the sector. winners and losers separate themselves. darden is in the winner's camp. >> netflix, down 8%. tim. >> we talked about the internet momentum stocks, and how they were the first to go down and the fears around washington. netflix rallied back. my point yesterday in a street fight was these guys i think hit saturation levels in the u.s. at 40%. they are having trouble growing internationally. >> hpq, a pop. the move this week 7%. >> they have their analysts it bounced, against $21, which is
where it exploded back in may. it traded down earlier this month. you want to be long in the stock. it still has percentage on the upside. >> here's fast money week in review. actually we don't care what dan thinks. we want to know what you say. the one and only regis philbin, riej is great to have you here on fast money. >> take that stupid notre dame hat off. >> i don't like guy adami. hit him right now. take care of those two boys will you? >> i will smack them around after the show. and we get a pop for sprite. pictures out of chinese university rated the lemon lime beverage as best cure for hangovers. >> that is gratuitous coverage. >> what are they doing? >> teflon -- >> listen to this music. >> don't buy this 8 track.
they are making it louder. >> that is tim's worst song. right? >> executive producer lydia loves this song. that's defensive listening at its finest. >> the highlight for me was melissa in glasses for sure. i think if the viewers have any say, guys take to twitter, let's see more of that. >> #glasses. still ahead from jack welch, a look at the biggest moments on cnbc today. as we head to break, a look at the stocks that led the way this week. ♪ to that kind of place ♪ ♪ sinking in your fight ♪ ♪ too many run aways ♪ ♪ eating up the night ♪
0 [ male announcer ] eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans they could save you in out-of-pocket medical costs. call today to request a free decision guide. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients... plus, there are no networks, and virtually no referrals needed. join the millions who have already enrolled in the only medicare supplement insurance plans endorsed by aarp... and provided by unitedhealthcare insurance company,
which has over 30 years of experience behind it. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide. o0 c1 if you have the audacity to believe in straight talk, not double-talk. if you have the nerve to believe that in a puzzling financial world, clarity is king. [ man ] if you believe nothing beats a sit-down for knowing where you stand. [ male announcer ] join the nearly 7 million investors who think like you do: face time and think time make a difference. join us. [ male announcer ] for 90 years it's how edward jones has made sense of investing.
♪ say something. make that song stop. >> it stopped. >> come on. >> just for you, guy. you asked for it. you asked for it. >> i have this on high authority. >> welcome back in case you missed today's top moments, here is a rapid-fire recap on the executive edge. >> i can tell you, we are not going to default on this debt absolutely not. but we won't have a blank check. we have to make changes. >> the president has become too powerful relative to congress. that's been happening for a long period of time. and it's accelerated.
>> you think it predates the obama administration? >> yes. it's been happening. absolutely. >> you think the president has more power, because some people would argue that the reverse is taking place. >> some people are wrong. >> we have a debt limit out there. it's the international financial markets. and when they don't see us addressing the very real problems, the thing that causing us to continue to have deficits then, they are going to price our securities in such a way, that we can't afford them. >> the polarization in washington is affecting our standing in the world, consumer confidence, consumer behavior. small and large businesses across the country are going to be affected dramatically. and this is no way to run a country. >> do you know about the end of this year. >> i know a story line. >> are you out of the prison this year. >> we do -- he's my boss right now. i don't know what i can tell you.
>> i know you're a huge fan of walking dead. >> i swear to god, what is that? >> that guy looks like he's walking dead. with all due respect. >> zombie people. >> can i say jack welch is a national treasure. i just think his unpartisan take is very important. >> i think people that believe that the gop cares about their poll ratings, that is nothing to do with it. in fact the people that elected those crazies are the people that will award them for screwing this up. how about that? >> do you want to say something? >> i just blurt usually. i rarely ask permission. >> so polite on this side of the desk. let's get to tweets. why not? tweets. here is the first one. this one is for josh. chesapeake energy just restructured, time to buy or not? >> the new ceo is doing all of the right -- he's doing everything that you want him to do. the guy sold 4 billion in assets. he cut 10% of the work force.
he's right sizing expenses with the opportunities. however, technically, this thing doesn't really break out into the mid30s, give it time on the long side. >> tim, trading thoughts on vale going into it's november 6 earnings. >> momentum has been good. overhang with foreign subsidiaries, up to 50 billion, i think you actually play this one. i think the brazilian government is learning they can't kill the golden geese. i would say long vale. >> did you just smack guy? what's going on here? what is going on here? it's friday. >> he hasn't recovered from the appendicitis. suck it up. it was like a month ago. >> suck it up. nice. time for the final. tim seymour. >> tasaro. >> stick around two option trades home depot and johnson and johnson. >> that's hot. >> i love josh. congratulations on the new gig, number one. number two, the most intelligent thing he said all nice was the glasses comment.
not to cast dispersions, you look great with glasses. aph, take a look at it. you might want to get long on that suck ore monday. >> that does it for us. i think. thanks for watching catch more fast on monday at 5:00. meantime don't go anywhere options action begins after this break. have a great weekend. so i c an reach ally bank 24/7, but there are no branches? 24/7.
i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches let's us give you great rates and service. i'd like that. a new way to bank. a better way to save. ally bank. your money needs an ally. every year american students earn degrees in math and science. but only three in ten of them are women. to have enough graduates to fill 21st century jobs... ...we'll have to solve this gender divide. let's inspire more young women to pursue math and science. let's light the way for a new generation. join exxonmobil in advancing math and science education. let's solve this.
♪ this is options action. tonight -- well, you might be the only one, that's because investors dumped gold at a furious pace. and according to traders, it's about to get worse. we'll tell you why. plus, which one of these three companies is about to release an earnings bombshell? >> i could tell you, then i have to kill you. >> no worries, maverick, we got the answers. and is netflix about to become a nightmare? >> you won't believe the dream i just had. >> the sto